Business

Opel's Antwerp factory is on the auction block

Opel's factory in Antwerp, which opened in 1924, ended production in December, costing some 2,500 jobs. The facility's machines will be auctioned off – possibly over the Internet.

Industrial machine auctions are increasingly going online

Now that Opel's factory in Antwerp has been closed, the struggling company is salvaging part of its investment through an auction of the plant's machinery. The auction will take place through March, and might include an eBay component.

By the time the 400,000-square-meter plant finally closed its doors in December, more than 2,500 employees had lost their jobs. The company built its Astra model in the Antwerp factory, first established in 1924 by GM Continental.

The plant closure is part of a restructuring plan meant to save Opel, which is owned by General Motors. A request for a government bailout of Opel was scrapped in June.

In a bid to return the company to profitability, interim CEO Nick Reilly is aggressively cutting overhead and investing billions into updating Opel cars.

Opel spokesman Andreas Kroemer said an auction is a "good way to quickly make the rounds with potential buyers."

"The property and the building will be offered separately, and we're still looking for an investor," he told Deutsche Welle. "But the site is well situated in the Antwerp harbor area."

A spokesman for Maynards, which is carrying out the auction, did not comment, citing an agreement with Opel.

Internet auction platforms

GM Continental first established the Antwerp plant in 1924

Six out of every 10 industrial auctions now take place over the Internet, according to Max Manuel Luders with the auction house Angermann & Luders that operates the Internet auction platform www.netbid.com.

But while Luders agrees that the Internet has had a major impact on industrial auctions, he still expects about 40 percent of them to continue as live events. When it comes to auctions selling 500 to 800 or more pieces of equipment worth hundreds of thousands of dollars, eBay is little more than child's play, he said.

Instead, specially-developed bidding platforms are used, according to Luders. And while a live auction can work through 100 to 140 positions in an hour, a buffer of about two minutes slows online bidding to 60 or 70 positions an hour. The buffer is necessary to make sure all bids are in before closing a position.

"It slows down the closing, and the customer has to bid in parallel on two or three different positions," Luders told Deutsche Welle. "And often in a live auction, customers will come from the area to buy less expensive items, which they wouldn't buy online."

Another drawback of online auctions is that they generally fetch lower sales prices than live ones do.

"I always have to tell people not to expect miracles," Luders said. "If they can do a live auction, they'll generally get a bit more than they had initially expected, because direct contact exists and the auctioneer can play psychological cards."

Used machines mostly exported

When used industrial machines are sold in Germany, about one-third of them goes to the domestic market, while another two-thirds are bought by foreign companies, according to Florian Hess, of Hess GmbH.

Less automation is needed in developing nations, where labor costs are lower

"When a new plant is constructed in a highly industrialized nation, then new machines are generally used," he told Deutsche Welle. "It has to do with the level of automation. Companies in developing nations don't need the latest robots… older technology is fine for them, even if it means two or three more people are needed to run the machine."

Still, there is a good domestic market for used machinery, consisting mainly of small to medium-sized companies that often manufacture items like replacement parts, according to Hess. Representatives from large German companies, he said, often visit his company's annual World Trade Fair for Used Technology in Cologne, sometimes looking for older machinery for training employees.

Used industrial machines are often refurbished, and they're often available on short notice, Hess added. That's an advantage when the economic cycle turns positive and machine builders have long backorder times.

While the machines hold their value differently over time depending on the pace of innovation, they often sell for around 60 or 70 percent of their original value, according to Hess.

The Internet has "definitely made the market more transparent" in that prices can quickly be compared, he said "There is a lot of trust involved in buying a used industrial machine."

The closing is still often done in person, Hess added, "unless it's an absolutely standard machine. Then the machine is examined, hooked up to electricity and measured to see if it has kept its precision."